Beside banks, where to keep cash?

[No 100% guaranteed]

he's not saying that the banks are too big to fall.
he's saying that the 3 big local banks are backed by big brother temasek
who has enough money to buy out the US treasury.

If all land and buildings in the USA were for sale, Temasek and GIC combined can virtually buy out half of the USA, and the better half at that.

ok, point noted.

is it wishful thinking that the government will come to the rescue IF any of the local banks collapse? and if so, how fast can we access the money again? when we deposit money with the bank, we are actually lending the bank our money and that's why we are paid interest?

but come to think of it... why is there such a huge difference in interest earned when we placed deposit in the bank and when we borrow from the bank, a loan? and the interest they charged us is so much higher as compared to when we placed a deposit, and further we are only insured with $20k by MAS... and the remaining balance is unguaranteed?? do we have any credit rating of the local banks?

so where else can we safe keep our cash? anyone?

[stock punter]

good questions PP, will try and answer them for you...

1.  yes you are lending money to the bank.  The alternative is to keep it under the matress, or even in a safety deposit box in the branch.  In that case you are not lending money, you are just storing it, and won't receive interest (indeed, you'll have to pay storage costs)

2.  the difference in rates between deposits and loans is partly to cover the banks costs (staff, branches etc) and required profit, BUT ALSO for the following reasons

* deposits are short term, and can be redeemed at any time, so effectively you are only lending the bank for a day (albeit, by not emptying your account every day, you effectively keep on rolling over this daily loan to the bank).  Loans on the other hand are long term, a month, a year, or many years (mortgages), and so carry higher interest rate.

*  The bank is perceived as safer credit risk than you, in other words there is more chance of you defaulting than the bank, and therefore the bank requires a higher return for lending to you (and so carrying your default risk) than it is willing to pay you and otheres to carry its default risk

that's the theory... now in practice the real risk of default and loss of depositors money in local banks is miniscule, since regulators and governments will do their utmost to protect the local banks in their jurisdictions, as a loss of confidence in the sanctity of deposits can have dire implications for all other banks.  Thats why the depositors of Northern Rock were protected by the UK Treasury for example. 

[money bags]

I wasn't complaining about DBS interest rates in particular.  SGD rates everywhere are low - in fact I moved money out of HSBC to DBS to get a higher rate.  The problem is that when interest rates are significantly lower than inflation, as it the current situation here, what to do with one's cash?  Invest in stocks?  too volatile for me at the moment.

I also have some GBP earning 7% in an Indian bank.  Bit risky maybe but it's one of the bigger ones.

Trick is to diversify: currencies, institutions, type of investment.  That way, if one should fail, you've not lost everything.  Used to call it "not putting all your eggs in one basket".

[economy]

The safest place often offer no interest. In addition, you may even have to absorb some cost for storage. Cheap storage of cos is a safe box at home. Otherwise, you can get a place to deposit in a country club & etc.

meosym@hotmail.com

[Dr. Phil]

The recent usd 700bn surrender to Wall Street is only a temporary fix (some say less than 1% of what is required) and the USA's fixation with liquidity will fuel inflation and the inevitable crash will be more severe.

So where to put cash is a serious concern. Stricter fiscal controls will aid the recovering US dollar which is strengthening as GBP and Euro decline.

If the dollar recovers, then next year we may see oil down to usd 30/bbl levels and prices at the pumps should follow (after the inevitable further 2 years gouging). 

Banks in UK offer 6.7% interest on savings however the GBP is falling and the Euro too will start to fall therefore repatriating cash right now might be costly. High interest rates often accompany a dodgy currency; what they give with one hand they take back with the other.

Singapore has a strong currency however the banks offer only 0.1% interest and since they can, for whatever reason, only guarantee SGD 20,000 they do not deserve our cash.

It would strengthen the situation here if government were to take prompt action and underwrite all savings up to SGD 250,000.00
This would suck cash from neighbouring economies, as Irish banks are doing (they have reached their limits), which perhaps is accelerating the GBPs inevitable collapse.

It is very dangerous to keep cash at home and gold is no longer an option. It does help that we have SGD 1,000 and SGD 10,000 notes.
Perhaps a safer option is for savers with banks such as HSBC to open a UK account which then is available in the event a quick transfer and higher interest rates are required. 

[Vulcanl]

The current USD rally is unsustainable.  Once the bailout is absorbed mr. market will realize that the US government will need to print ever more vast amounts of money to buy the noxious holdings on the books of US banks.  USD will then get whacked.

Never hoard cash - it is just about the dumbest thing to do as inflation automatically eats away at the value of your currency.

I have thought about this.  One possible course of action if you have a mortgage is to deposit cash up to the amount of your debts with the lender.  In this manner should that bank go under you simply walk away.

This sounds crazy but taking on debt now to funds tanglible assets (home, automobile, etc) is a sound course of action (assuming of course that you can comfortably service this debt).

[vulcanizing]

Got you again !! trying to fix the flat system with all of your hot air.  Only thing to do is to roll up your sleeves and get to it. ha ha ha ha ah aha aha lah ah halh hah

[Vulcanl]

vulcanizing,

I can't make out what your point is.  Would be interested to hear your reasoned counter-argument.

[John Grahm]

The US Dollar is a garbage currency. If you have bank accounts denominated in US dollars, get your money out and transfer it to a different currency.

Asian banks are in great condition as they never bought the terrible Mortgage Backed Securities that Lehman was peddling. I wouldn't be concerned about them going under.

Gold is the BEST place to put your money. Gold costs $700-800 to produce/mine 1 oz. worth. It currently sells for $830. You will basically be getting gold at its price floor.

In addition, the volatility in currencies in recent months has made central banks less favorable towards currencies, and are beginning to look towards gold as a store of value. Gold's price has been EQUAL to the price of commodities during the past decades. SO while the dollar has plummeted in value 30%, gold has increased hundreds of percent.

Gold is the perfect store of value that can't be abused like a fiat currency can. Interest rates can't be lowered or raised on gold, and the Fed can't run the printing presses on it. With gold, you are free from government's reckless spending and its inflationary side effects. In other words, BUY GOLD.